Although the overall cellphone market declined during Q2, sales of smartphones continued to increase.

A new report from Gartner found that 286.1 million mobile phone units were sold during Q2, a 6.1 percent decrease from Q2 2008. However, more than 40 million smartphones were sold, a 27 percent increase from last year.

One of the reasons smartphones remain popular is that most people buying new phones want either a QWERTY keyboard or a touch-screen. But people are still buying new phones based on price, and the current state of the economy is making it a tough time to sell phones.

“The recession continued to suppress replacement sales in both mature and emerging markets,” the report stated. “The distribution channel has dealt with lower demand and financial pressure by using up 13.9 million units of existing stock before ordering more. Gartner expects the gap between sell-in to the channel and sell-through to customers will reduce in the second half of 2009 as the channel starts to restock.”

The report found that Nokia is the market leader throughout the globe, as it sells almost as many phones as its next four competitors combined. In the United States, however, Nokia faces tough competition from the popularity of the iPhone, BlackBerry and Android.

The report also touched on the Palm Pre, which only sold 205,000 units, despite the amount of media attention the new phone attracted. Palm currently ranks 10th in the smartphone market.